Investors retreat ahead of Jackson Hole

GRIT
25 Aug

Good Morning!

Good Morning Everyone! Help us make GRIT your top daily finance read! 📈 Take our survey (here) by August 29, 2023, for a shot at a FREE 1-year subscription and a 30-minute Zoom chat with Genevieve Roch-Decter.
Let's do this! Sign Up Here! 💪📊🎉

Jerome Powell speaks today at 10:05 am at Jackson Hole. His every word will be dissected for hints of a further rate hike in September.

Hold on to your hats!

Prices as of 4 pm EST, 8/24/23

Indeed

👩🏼‍🏭 The labor market remains healthy. Initial jobless claims for the week ending August 19 fell unexpectedly by 10,000 to 230,000. Consensus called for a 1,000 increase. Continuing claims, meanwhile, also fell more than expected and are close to 6-month lows which suggests newly unemployed workers are not facing challenges finding new jobs. Separately, new data from Indeed reveals wage growth is declining faster than inflation is. Whereas wages grew 8% YoY in July 2022 and 5.8% in April of this year, posted wage growth was just 4.7% in July (on a 3-month average basis). That marks the slowest gains for wages since late 2021. The Fed loves that.

🗺️ BRICS is expanding. Of the 23 nations that applied to join its ranks, the emerging market coalition has announced it will extend invitations for membership to 6 new countries: Argentina, Egypt, Ethiopia, Saudia Arabia, and the United Arab Emirates. The additions mean the newly expanded bloc will soon (come January 1, 2024) account for 46% and 37% of the world's population and GDP (in terms of purchasing power), respectively. Regarding the group's identifying acronym, Brazil President Luiz Inácio Lula Da Silva notes it's too catchy to change: "The name will remain BRICS, it's beautiful".

A Banksy got everyday investors 32% returns?

Sponsored By: Masterworks

Mm-hmm, sure. So, what’s the catch?

We know it may sound too good to be true. But thousands of investors are already smiling all the way to the bank, thanks to the fine-art investing platform Masterworks.

These results aren’t cherry-picking. This is the whole bushel. Masterworks has built a track record of 16 exits, including net returns of +10.4%, +27.3%, and +35.0%, even while financial markets plummeted.

But art? Really? Okay, skeptics, here are the numbers. Contemporary art prices:

outpaced the S&P 500 by 131% over the last 26 years
have the lowest correlation to equities of any asset class

Got your attention yet? Grit Capital readers can skip the waitlist with this exclusive link.

*This is PAID advertising content and the disclaimer at the bottom of this email MUST be read carefully. See important disclosures at masterworks.com/cd

NAAIM

📉 We've said it before and we'll say it again: there’s nothing like price to change sentiment. According to the National Association of Active Investment Managers (NAAIM), active managers have now reduced their exposure to equities for 4 consecutive weeks. The NAAIM Exposure Index now sits at its lowest level since October 2022 (shown above). Turning to retail investors, the American Association of Individual Investors (AAII) Sentiment Survey revealed more bears than bulls for the first time in 3 months, pushing the bull/bear spread down to -3.6 from 5.8. Bullish sentiment among retail now sits in the 33rd percentile.

Cboe

⏱️ That said, retail still loves its options. More specifically, they love their zero-day-to-expiration (0DTE) options. In fact, according to Cboe Global Markets, retail investors probably account for 30% to 40% of volume linked to 0DTE contracts. Previous estimates had that number at just ~5%. Meanwhile, Wall Street can't seem to decide on how the rise of 0DTE options (which have accounted for 43% of S&P 500 options traded this year as illustrated above) has impacted markets. Whereas Goldman Sachs recently noted that short-dated options had exacerbated the latest sell-off, Bank of America argues that logic was vastly overstated.

IMF/Financial Times

📈 Subsidies for global fossil fuels hit a new record in 2022. That's according to the International Monetary Fund (IMF) which revealed a total of $7 trillion in subsidies for coal, oil, and natural gas last year. The figure represents 7.1% of global GDP. Driving the increase were "implicit subsidies" (account for 82%) which reflect governments undercharging for the supply costs of fossil fuels (i.e., when retail prices are lower than supply costs).

📊 Yesterday’s highlights:

DLTR Dollar Tree: $0.91 EPS (vs. $0.87 expected) ✅, $7.32 billion in revenue (vs. $7.18B expected) ✅.

The budget retailer noted consumer behavior is shifting as shoppers become more price-sensitive.
Like others, Dollar Tree is facing challenges from inventory shrink and theft.
The company modestly raised its outlook for profits and revenue for the fiscal year but came up short of Wall Street estimates.

Rate debate: Fed officials disagree on where rates should go from here.
1% down: Zillow has launched 1% down payment mortgages for homebuyers in Arizona.
Brief rally: A rally in Chinese stocks following a Beijing effort to boost economic growth was short-lived.
Layoffs: T-Mobile will reduce its workforce by ~7%, or around 5,000 employees.
Crypto cards: Mastercard and Binance will terminate their crypto card partnership.
Trump surrenders: Donald Trump surrendered to authorities in Georgia to face criminal charges.
Beer sale: Heineken sold its Russia business, which includes 7 breweries, for $1.
OnlyFans payout: OnlyFans has paid its owner $338 million in dividends.

Online fashion: Shein and Forever 21 have struck a partnership wherein the former will sell the latter's products on its site.
AI raise: AI startup Hugging Face has raised $235 million at a $4.5 billion valuation from Google, Amazon, Nvidia, and others.
Audiophiles: Sony will acquire audiophile gear maker Audeze to boost its gamer experience.
WeBroke: Wall Street funds are discussing potential bankruptcy plans for struggling WeWork.
Pet market: PAI Partners will acquire pet food maker Alphia for ~$1 billion including debt.

People who locked mortgages under 3%
— Grit Capital (@Grit_Capital)
Aug 24, 2023

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Sources:

https://www.hiringlab.org/2023/08/24/august-2023-labor-market-update/
https://www.naaim.org/programs/naaim-exposure-index/
https://www.bloomberg.com/news/articles/2023-08-24/retail-traders-are-driving-up-to-40-of-zero-day-options-boom?srnd=markets-vp
https://www.ft.com/content/fa607c72-7810-4ed5-98a3-d27d004c15bd
https://www.cnbc.com/2023/08/24/dollar-tree-dltr-earnings-q2-2023.html

DISCLAIMER: This newsletter contains content sponsored by Masterworks, LLC. Grit Capital Corporation (“Grit”). has been paid by Masterworks, LLC to conduct an advertising campaign on this newsletter owned and operated by Grit. Grit will be paid in cash for this advertising campaign. Be aware that the payment received by Grit may put Grit in a conflict of interest with the investor/reader.

Grit is a publisher of financial information, not an investment advisor. Grit does not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient. Grit does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.

THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN. INVESTORS SHOULD OBTAIN INDIVIDUAL INVESTMENT ADVICE BASED ON THEIR OWN CIRCUMSTANCES BEFORE MAKING AN INVESTMENT DECISION

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.

Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and Grit undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.

Grit does not accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

By using the Site or any related social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.

Grit publishes content through Beehiiv, an email newsletter platform and operates the websites Gritcap.io and Get-versed.io and and social media accounts (including but not limited to): Instagram, Twitter, Linkedin, TikTok, YouTube, SnapChat, Facebook and Threads. By accessing Grit’s content, you agree to be bound by the Terms of Use and Privacy Policy, in effect at the time you access this website or any page thereof or any of Grit’s content. The Terms of Use and Privacy Policy may be amended from time to time. Nothing on this website or Grit constitute an offer to sell, or a solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction where such an offer or solicitation is against the law or to anyone to whom it is unlawful to make such offer or solicitation. Grit is not an underwriter, broker-dealer, Title III crowdfunding portal or a valuation service and does not engage in any activities requiring any such registration. Grit does not provide advice on investments or structure transactions. Offerings made under Regulation A under the U.S. Securities Act of 1933, as amended (the "Securities Act") are available to U.S. investors ONLY who are “accredited investors” as defined by Rule 501 of Regulation D under the Securities Act well as non-accredited investors, who are subject to certain investment limitations as set forth in Regulation A under the Securities Act. In order to invest in Regulation A offerings, investors may be asked to fill out a certification and provide necessary documentation as proof of your income and/or net worth to verify that you are qualified to invest in offerings posted on this website. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. Grit does not verify the adequacy, accuracy or completeness of any information. Neither Grit nor any of its officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, valuations of securities or completeness of any information on this site or the use of information on this site. Neither Grit nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising from any error or incompleteness of fact, or lack of care in the preparation of, any of the materials posted on this website. Investing in securities, especially those issued by start-up companies, involves substantial risk. investors should be able to bear the loss of their entire investment and should make their own determination of whether or not to make any investment based on their own independent evaluation and analysis.

Please read: Terms of Use, Privacy Policy, Disclosure Policy and Disclaimer Policy.

If you have any questions please contact us at [email protected]